Taxes Consolidation Act 1997 section 618

Transfers of trading stock within group

Section 618 sets out the tax treatment of transfers of trading stock within a group of companies, dealing with situations where a non-trading stock asset is acquired as trading stock by another group member, and conversely where a trading stock asset is transferred to another group member as a non-trading stock asset.

• Where a group member acquires as trading stock an asset that was not trading stock in the hands of the transferring group member, the acquiring company is treated as having acquired it otherwise than as trading stock and immediately appropriated it to trading stock, triggering the rules in section 596.
• The disposing company is treated as making neither a gain nor a loss, while the acquiring company is treated as having acquired the asset at the original cost and immediately disposed of it at market value, giving rise to a chargeable gain — though the acquiring company may elect to bring the asset into its trading account at cost instead.
• Where a group member disposes of a trading stock asset to another group member who acquires it otherwise than as trading stock, the disposing company is treated as having appropriated the asset out of trading stock immediately before the transfer, with the amount in its accounts forming the base cost for the recipient.
• The section applies to trades carried on in the State by Irish-resident companies and to trades carried on in the State through a branch or agency by non-resident companies.